Municipalities to dip into R400bn VAT kitty in radical financing proposals

The government seeks to redirect a slice of VAT revenue to local government by giving municipalities a share of the more than R400bn South African Revenue Service (Sars) collects in VAT annually. VAT is a key tool available to national governments to raise revenue, second only to personal income tax.

In the 2024/25 financial year, Sars raked in about R457bn in VAT, R733bn in personal income tax and R323bn in corporate income tax. The proposal to dip into the VAT kitty forms part of the sweeping proposals by the department of co-operative governance & traditional affairs to overhaul municipal funding.